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Why is Yahoo on a spending spree?

Why is Yahoo on a spending spree?


Marissa Mayer's acquisitions of four small companies bring talent home to build up Yahoo's social homepage

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Marissa Mayer-Yahoo-Stamped-Instagram
Marissa Mayer-Yahoo-Stamped-Instagram

Today, Yahoo announced it would buy Jybe, a startup delivering personalized recommendations for movies, books, and restaurants. Jybe’s mobile app will be shuttered, but the acquisition brings a team of five former Yahoo employees back to the company.

It's Yahoo's fourth purchase of a personalization or recommendation service since Marissa Mayer became CEO last July. Mayer has emphasized a renewed focus on “core, pillar products” and a “coherent mobile strategy,” pruning products at the periphery. The company has generally passed on high-profile acquisitions of hot social startups or bigger companies (Although rumors of big-ticket buys persist, so far none of Yahoo's acquisitions have even warranted a press release for investors.) Instead, the company’s built up its talent, spending less money and hiring familiar faces who can build up Yahoo’s own products in the same spaces.

Yahoo is aiming to reclaim its status as the internet’s preeminent home page

But make no mistake: there’s a clear trend line here, and it’s bigger than just a few more developers to turn out new mobile apps. Yahoo is aiming to reclaim its status as the internet’s preeminent home page, where news, mail, media, search, social, and advertising all blend together in a tailored, personalized display for each user. Where Facebook has gradually sought to add search and communications and Google ham-handedly attempted to graft a social network to itself, Yahoo’s “light social” approach offers a clear alternative to both. It may not be appealing to everyone, but it will be valuable to enough to remain an important internet company well into the future.

“Basically we’ve learned a lot about how to use search scale techniques, both on the data science side but also large-scale engineering, and apply it to signals to really do personalization well,”Jybe co-founder (and former Yahoo VP and head of search technology) Arnab Bhattacharjee told TechCrunch. “We really want to take those technologies and apply that across most of the Yahoo properties.” (A Yahoo spokesman declined to speak to The Verge about its plans for Jybe or its other acquisitions, saying the company does not comment on future plans for the business.)

Yahoo's new teams will apply far-reaching personalization across Yahoo's properties

In October, Yahoo acquired the recommendation startup Stamped, reuniting Mayer with ex-Googler Robby Stein. In the last few months, the company has also added, a "Pinterest for links," and Alike, a mobile app that allowed users to recommend and share nearby venues with their friends. All three companies saw their products shut down and their teams folded into Yahoo’s mobile and social divisions.

It's now been a month since Yahoo debuted its redesigned home page, revealing a new streamlined layout it called "more intuitive and personal," allocating more real estate for the company's most popular services, including email, news, finance, and sports. It also added a new Twitter-like stream and social features which would help surface content recommended by a user's Facebook friends. While the company may have once focused almost exclusively on the desktop, Yahoo’s new home page was simultaneously updated on its tablet and mobile versions.

A smartphone doesn't have a home page, it has a home screen

The larger problem Yahoo faces in mobile is that a smartphone doesn’t have a home page. It has a home screen that offers services specifically tailored to mobile use that are dominated by the company that makes the smartphone or its OS. This is where focused applications like Flickr as well as personalized, contextual services like bookmarking, contextual search, and local recommendations — services like the ones provided by the companies Yahoo’s just bought — can give a Yahoo mobile app an edge, earning it a coveted place up front on phones. Anything to boost the paltry $125 million in annual revenue Yahoo reportedly earns from mobile. (The company also has to address basic product problems like preventing email accounts from being hacked.)

Mayer said in February that the home page redesign was “the first of several releases,” but if we take its current changes and recent purchases, Yahoo’s future is clear. It’s a blend of services provided directly by Yahoo (mail, news, ads) and augmentations from third parties (Bing, Facebook, Google). Like Flickr, it’s a hybrid of the personal experience, private sharing, and targeted marketing of a social network and the mix of information and multimedia from the open web. Meanwhile, Yahoo manages display. It doesn’t need to own all of its media or the backends that deliver it. Yahoo just needs to know how to show it to you and how to make it yours.

Can pragmatism beat purity?

The future of Yahoo is “home”: the place you make your own, where you leave in order to return again. With Google and Facebook aiming to control as much of their platforms as possible, to put users’ identities and the world wide web in a box defined by a single company, what if a humbler, pragmatic Yahoo might have held the secret all along?

Matt Brian contributed to this report.